Forex Today: US Dollar’s comeback in the making?
|What you need to take care of on Tuesday, December 6:
The American dollar finished Monday with substantial gains after starting the day on the back foot. The Greenback initially fell on the back of news coming from China, as different districts are easing their restrictive COVID-19 measures, while market talks pointed at further loosening in January.
Markets changed course following the release of upbeat US data, with the US Dollar accelerating its advance ahead of Wall Street’s close. The official ISM Services PMI for November improved by more than anticipated, surging to 56.5 from 54.4 and beating the 53.1 expected. Additionally, Factory Orders rose by 1% MoM in October, better than the 0.7% advance expected, while S&P Global upwardly revised its November Services PMI to 46.2 from a preliminary estimate of 46.1.
Ahead of the December central bank’s meeting, European Central Bank (ECB) policymaker Gabriel Makhlouf said that a 50 bps rate hike is the minimum necessary, adding that he would not rule out a 75 bps hike. The ECB and the US Federal Reserve (Fed) will announce their decisions on December 15 and 14, respectively, and policymakers will enter their blackout period next Thursday.
EUR/USD trades around 1.0480, while GBP/USD plunged to the 1.2160 price zone. Commodity-linked currencies were also under strong selling pressure, with AUD/USD now struggling around 0.6670 and USD/CAD nearing 1.3600.
Crude oil prices surged at the beginning of the day amid Chinese news, which means steady demand, and as OPEC+ announced its decision to maintain its decision of reducing oil production by 2 million barrels per day. Another factor weighing on oil prices was the latest EU decision to put a cap on oil prices. Moscow said it will not recognize the price cap and is preparing a decision. The black gold turned south early in the US afternoon and posted sharp losses amid the broad USD strength. WTI settled at $77.20 a barrel.
Gold surged to $1,810 a troy ounce at the beginning of the day but plunged amid renewed USD demand and ends the day around $1,766 troy ounce.
The greenback surged also vs safe-haven currencies, with USD/JPY recovering towards the 136.70 price zone.
The Reserve Bank of Australia will announce its decision on monetary policy first thing Tuesday.
Cryptocurrencies collapsed with the resurgent US demand. BTC/USD trades around $16,900, down over $1,000 on the day
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.